Assignment on Westpac is a Banking Organisation?

Introduction
Westpac is a banking organisation that operates globally. The sector that westpac operates in
is the financial services industry in which they provide a wide range of financial services to
their customers. These services include; Online banking, Managing deposits, Currency
converting, using Westpac ATM’s etc. The scale of the company in Australia focuses on four
divisions these are; Consumer, where services are provided to their customers. Business, in
which services are provided to micro to medium sized businesses. Westpac Institutional bank
(WIB) which provides services to corporate and government organisations. Westpac New-
Zealand, which operates their services within New-Zealand. Westpac also produces
performance reports that reflect how their business is achieving their goals each year.
Current Policies and Management Strategies
Westpac were the first Australian bank to recognise the importance of limiting global
warming and to do this global emission needed to reach a net zero in the second half of this
century. Westpac has provided an action plan to reduce the risks and impact of climate
change. They believe implementing these actions by effectively identifying, managing and
mitigating climate change risk will have a positive impact on the community and economic
benefits in the future.
(1). Provide finance to back climate change solutions:
Westpac is working towards a transition to a net zero emissions economy but is dependent on
the availability of cost-effective low carbon solutions. Net Zero emissions mean that
greenhouses gases that are emitted must be equally captured through adopting renewable
energy and clean technologies.
(2). Energy systems:
Westpac is taking into consideration the energy system’s entire value chain, from energy fuel
to power generations. Westpac uses thermal coal as an energy fuel because of its abundance,
affordability and reliability and is one of their main energy generators. However, limiting our
lending to any new thermal coal mine or project we will be actively reducing the contribution
to greenhouse gases and reducing the contribution to air pollution.
(3). Agribusiness:
Agribusiness plays a fundamental role worldwide and is essential for our future with
providing food and other essentials needs to people. It also is a major contributor to driving
the economic growth, reducing poverty and supporting communities. The Banking
Environment Initiative (BEI) and the New York declaration on forests are working towards
transforming banks to achieve a zero-net deforestation by 2020 (Verhagan, 2020). The
intention is to lead the banking industry to identify and implement measures that support
practices and that reduce deforestation. Westpac is committed to a net zero deforestation by
2020 to do this; they have minimised the quantity of paper purchased and maximised the
sustainable qualities of the paper used. Westpac has committed to new technologies and
practices that will reduce their environmental footprint by having the availability of e-
statements and paperless processes for all customers (Westpac Banking Corporation, 2013)
(4). Mitigating Low Carbon Emissions:
Financial institutions have become incentivised through their years where they put
regulations to mitigate the effects on climate change. Previous literature has discussed the
regulations that have been put into place over the years to reduce the effects of climate
change (Bowman, 2010). The first one is to create incentives to be placed on energy-efficient

projects (Bowman, 2010). The second being to have monitoring of a company's greenhouse
gas emissions (GHS). The third is to reduce spending on projects that take on large GHS
emission projects (Bowma, 2010). Westpac has incorporated this strategy to mitigate the risk
of the effects of climate change. An example of this in 2020 had been incorporated through a
sustainability linked loan from Westpac NZ to Contact Energy where Westpac used the triple
bottom line approach when setting out this sustainability loan to Contact Energy. Contact
Energy received the four year loan to improve its social, environmental and governance
(ESG) targets. As a result of this if Contact energy were able to meet their targets Westpac
NZ will provide lower interest rates (Westpac, 2020). If Contact Energy were not able to
meet their ESG targets they will have to pay a higher interest rate. This sustainability linked
loan provides an incentive for business owners to maintain their sustainability goals.
(5). Sustainability Strategy:
Westpac has developed a sustainability strategy for 2018-2020 that focuses on three key
areas, these areas are (1) to ensure that customers make better financial decisions. (2) In times
of need Westpac will be able to support their customers and (3) help achieve a successful
nation.
Strengths Weakness
The advantages you have over the competition concerning
the project
What are your strengths
 In 2015 Westpac was the first bank to commit to
support the Paris Climate Agreement and work
towards transitioning to a net zero emission economy
by 2050.
 Westpac has actively seek out technologies and
practices that have reduced the use of paper and their
impact on environmental footprint.
 One of the first Australian companies to commit to
source 100% of global electricity consumption
through renewable energy sources by 2025.

What do you do better than others?
 Westpac is the largest lender to new renewable
energy projects in Australia
 Westpac’s commitments to climate change solutions
increased to $9.3 billion last year
 Investing in energy efficient technologies and
exploring opportunities to use recycled materials.
What unique capabilities and resources do you possess
 Committed to sourcing 100% of our global electricity
consumption through renewable energy source by
2025.
The disadvantages you have internally compared to
your competitors
What are your weaknesses
 Uncertainty about the rate of innovation and
adoption of clean energy technologies
What do your competitors do better than others
 Still providing but, limiting funding to
companies that produce large amounts of GHG
emissions.
What can you improve given the current situation?

What do other perceive as your weakness
 Having commitments to achieve results that are
not fulfilled by the timeframe suggested.

What do other perceive as your strengths
 Commitments to achieve/mitigate the risks of climate
change.
Opportunities Threats
Current external trends which are waiting to be taken
advantage of
What trends or conditions may positively impact you
 Companies wanting to receive incentive based loans
to fulfill sustainable projects or renewable energy
sources.
 Westpac will become a member of RE100 one of the
worlds most influential business who have
committed to go 100% renewable
 Engaging suppliers and other value chain partners in
GHG management and sustainability.
 Increase stakeholders information and corporate
reputation through public reporting.
What opportunities are available to you?
 Contracted loans where providing money to a
company to achieve its sustainable goals providing
lower interest rates if accomplished and higher
interest rate if the goal is not achieved by the end of
the contract. These are incentive based targets that
align with social, environmental and economic
pillars.
External movements which may cause a problem and
have a negative impact on your business
What trends or conditions may negative impact you?
 The increased effects of climate change can
cause policy-makers to create policies that affect
the economic profits of financial institutes
(Westpac) this can be through limiting
technological or adapting new ways to use
technology. The added risk of lack of
resilience in this area.
 The effect on severe weather and the impact that
can have on Westpac through supply shocks.
The Uncertainty that this can happen.
 Target may be more challenging to achieve if
the company grows and growth is linked to
GHG emissions.
What are your competitors doing that may impact
you?
 Competitor banks supply more funding to fossil
fuel companies.
Do you have a solid financial support?
 Diversion of resources from innovation to
adaptation capital
What impact do your weaknesses have on the threat of
you?
Develop a plan as to how these policies and strategies and their implementation
could be improved to minimise business impacts relevant to climate change and
to foster sustainable outcomes
Develop a Plan
Climate change is a global problem and businesses operate in a global environment. In the
Paris Agreement national governments committed to limit temperature rise to well below 2
degrees Celsius in the hope to reduce dangerous climate impacts and humanitarian crises
worldwide (wbcsd, n.d.). Therefore, companies have a vital role in ensuring that the global
temperatures are met. The majority of global GHG emissions are directly or indirectly
influenced by the companies sector. Westpac has recognised the risk of climate change and
proposes to incentivise energy efficient projects as well as decentivise projects that produce a
lot of GHG emissions such as large fossil fuel companies. Westpac does this strategy well to
mitigate the effects of climate change that align with the triple bottom line approach as
explained in the case study above. However this current plan can be improved further by
making new commitments such as … with added time frames to meet those deadlines.
 Incentives aligns with triple bottom line,
 Decentives is a way to mitigate the effects of climate change
 The use of thermal energy coal ? (limit lending thermal coal mining based on
stringent quality criteria)

 Provide resilience to the company from the effects of climate change? Example
supply shocks or natural disasters that can have an effect on the business operations.
 Commitments (timeframe) ?
Current plan can be improved by farther :
Westpac Banking Group can make major changes in order to make improvements in the
existing policies and strategies to get better results for climate change. Considering the above
discussion, it has been noticed that Westpac is one of the institutions that give importance to
address the issues of climate change. In order to further improve these operations, the
company is recommended to include a paperless transaction policy into its policies and
strategies of climate change and sustainability. It is known that most of the operations of the
bank are executed through paperwork which is resulting in contributing to deforestation. To
overcome this issue and make zero-emission environments, the company needs to eliminate
the use of paper from its operations and focus on digital transactions. This will not just
contribute to saving the environment but will also help businesses in improving their image in
the market. These paperless transactions can be implemented and monitored by the
environmental sustainability team of the company.
Policy – Paperless Transaction
Strategies Objective Responsible
Department
Conducting
market research
To identify the possible technologies that can
help in executing the plan for a paperless
transaction.
Research and
Development
Hiring and To develop an effective team to work on Human Resource

arranging
workforce
meeting the objective of the policy. Department
Executing the
work
Identifying the technologies and alternative
ways such as the use of digital technologies
for the transaction in the business.
Operational and
Administrative
department
Controlling and
monitoring
To check the progress and evaluate the results Top management and
administrative
department
From the above analysis, it can be said that the adoption of paperless transaction policy into
the business will be helpful in the future. This is because it is known that the increasing
development is resulting in impacting the environment negatively in the form of
deforestation, climate change, water scarcity, polluted air, destruction of the wildlife, etc. If
the company will adopt this policy that is a paperless transaction by the use of digital
technology all these above-specified issues can be avoided because trees are considered to be
very important for environmental protection.
Short Plan
Westpac has a few climate change solutions in their short term vision (0-3 years) and these
include, increasing lending to climate change solutions from six billion dollars to ten billion
dollars as well as facilitating 3 billion dollars in climate change solutions by the end of 2020.
Other short term solutions that Westpac are aiming to achieve is reducing their own
greenhouse emissions by 9% by the end of 2020. Westpac also offers support to companies
that are in the agricultural industry which are committed to zero deforestation and or

companies that do not adversely impact forests. The final short term plan is to reduce lending
to companies that create large amounts of emissions such as coal mining companies.
Westpac has a great short term plan over the next three years for the industry that they are
working in. Being a bank, changing the way that they lend money to businesses depending on
how good they are working on controlling their emissions, Westpac does this as they are in a
field that doesn’t create too many emissions. As well as supporting climate change solutions
to individuals and businesses, Westpac is also trying to minimise their own emissions by 9%
which is also a great goal.
Westpac’s medium term plan (3-10 years)
 Lending to climate change solutions $25bn by 2030
 Committed in April 2019 that Westpac would source 100% of global electricity
consumption through renewable energy sources by 2025
Westpacs long term plan (10-30 years)
 Alignment with the method to set science based target for scope 1 (emissions from
sources that are owned or controlled by the reporting company) and scope 2 emissions
(emissions generated from electricity that has been purchased by the company)
Reflection
As per the analysis presented above, I would like to through some light related to the way
these changes in the system can provide benefit in the future to the industry. As I have
provided some suggestions in the above part of the report that Westpac will incentivize the
energy efficient projects such as construction of energy efficient buildings, this will in the
future lower the emission of GHG and many other pollutants from the environment along
with reduced use of water, which will enable the access to water for the future generation too.
Besides this the enhanced energy efficiency is considered to be less expensive in comparison
to investment in new transmission and generation. In addition to this, decentivising the
projects that produces high level of GHG emission can help in limiting the effects of climate
change. By doing this, Westpac can set an example for the entire industry in terms of making
the sustainable business.